Articles Posted inEstate Planning

Getting married for a second time is fairly common. But the financial and estate planning issues that result from remarriage often pose a different set of problems than that of the first marriage. For one, in the first marriage you have no prior issues to deal with such as children, support payments and an ex spouse to contend with.

The major problem with a second marriage deals with the issue of children. When you remarry with a different partner they too may have children and therein lies the issue of a new blended family. Child custody issues may arise not that there are new siblings and new stepparents involved in raising the children. If you have left over issues involving child custody then there might be difficult times ahead. The prior spouse may have issues with the new spouse their children. Who is making the rules now with the new family? is it the new spouse? Does their parenting of their children influence your parenting and effect your prior spouses concerns about their own children and what is happening to them.

If you and your new spouse keep a joint bank account to pay common bills therein lies another big problem. If you have unresolved issues regarding money with the prior spouse then the second spouse might get involved in that dispute unknowingly and innocently. If Creditors are after you from the prior marriage then they may continue the pursuit of your money including the bank accounts you have with the current spouse. Creditors are not going to divide the bank account they can attach and levy that holds your money. Therefore you new spouse may jeopardize their own money by commingling in your bank account. The best advise is the keep separate bank accounts from your new spouse knowing that the prior divorce is still pending and or many unresolved issues linger over for many years to come.

I recently read an article here about why it is important for women to have an estate plan. This comes on the heels of an increase in the estate tax exemption from $3.5 million in 2009 to $5.0 million for 2011 and 2012. This means that that when someone passes they generally will not be subject to estate tax unless the amount of his or her investments, property, cash, real estate, etc., (your net assets) is greater than $5 million.

Many wills are drafted to state that the amount of your spouse’s assets that will go to your kids in an amount equal to the federal exemption amount ($5.0 million) and the remainder of the assets will go to you. This is fine when the exemption amount was $3.5 million, but it may not work so well at $ 5 million.

For example, say all of the assets accumulated by Husband and Wife are in Husband’s name. Further, say that the assets are worth approximately $5 million. Husband passes away and his will dictates that the federal estate exemption amount goes to your children, the remainder to you. Let’s do the math.

With tax time fast approaching this is a good moment to examine some of the ways in which an Orange County divorce can affect one’s tax status. A fascinating article posted yesterday on the financial website Smartmoney.com examines the consequences of an obscure IRS provision known as the “Innocent Spouse Rule,” touching on its particular role in divorce cases.

Briefly stated, the innocent spouse rule allows one spouse to avoid tax penalties related to a joint return if he or she can plausibly claim to have had no knowledge of what the other was doing in filling it out. As the article at Smartmoney.com makes clear, the term “spouse” can be slightly misleading, since the rule can also apply to divorced couples. That, of course, is good news. One of the sad realities of divorce, be it in Orange county, Los Angeles, San Bernardino or elsewhere, is that dissolving a couple’s financial links can sometimes be a more complex process than dissolving the marriage itself.

Smartmoney, for example, cites a case from the 90s in which a woman “was denied an appeal after the IRS wouldn’t let her claim the innocent spouse rule over a return prepared by her ex-husband.” The point here being that tax obligations incurred during the marriage followed the woman even after her divorce. Smartmoney notes that the law was changed in 2004 to make innocent spouse claims easier to file. That, however, has led to a huge spike in the number of claims made under the law and has led the government, in turn, to view such claims with increasing skepticism.

Considering how strange some aspects of Michael Jackson’s life were it was probably inevitable that the late singer’s estate would end up in court. Arguments over the California custody of the singer’s children emerged in the days following his death last year. Soon afterward Joe Jackson, filed suit alleging that as Michael’s father he is entitled to a say in the administration of his son’s estate.

According to the Associated Press, Jackson’s will named a lawyer and a music industry executive as the co-administrators of his estate. Joe Jackson challenged this soon after his son’s death.

“I think it’s an important issue for all fathers around the country and around the world that when their child dies they should have a say-so in their child’s estate,” the news agency quotes the elder Jackson saying. Attorneys for the singer’s estate take the position that as an adult Michael Jackson (who was 50 years old at the time of his death) was free to designate whomever he pleased to administer his fortune after he passed away. Joe Jackson lost the initial legal round of this case in a lower court. A California appeals court has now set October 6 as the date for arguments in the next phase of what promises to be a lengthy legal saga.

In California, we do not recognize common law marriages. In an interesting twist over the battle for Gary Coleman’s estate, his ex-wife, Shannon Price is now asking the Utah courts to recognize her alleged common law marriage to Gary Coleman. She requests the commencement date to be the date of the divorce filing through Coleman’s death. Ms. Price claims that she and Mr. Coleman continued to live together and they also continued to hold themselves out as husband and wife. Coleman most likely had a will in place awarding his estate to his surviving spouse.

It is also interesting to note that Coleman’s ex-girlfriend, Anna Gray, contends that a 2005 document awards her Coleman’s estate.

Whatever the case may be, a probate court will have to deal with these individuals wanting a piece of Coleman’s estate. Since California does not recognize common law marriages and if you and your live-in partner have an agreement that sets forth any “promises” and if those promises are not kept, your best option would likely not be in a family law court. Contact a Costa Mesa divorce attorney to explore your options.

By now, we all know of the untimely death of child star, Gary Coleman. It was reported last week that Shannon Price, the ex-wife of Coleman, requested to be appointed special administrator of Gary Coleman’s estate. Price based this request on a handwritten document purportedly written by Gary Coleman making her the sole beneficiary of his estate. The alleged handwritten document appears to have been executed in 2007, When Coleman passed away, Price and Coleman were already divorced. Generally speaking, when couples are in the process of a divorce, the smart thing to do would be to consult a probate attorney and make arrangements to modify one’s will or trust if they have no intent to bequeth assets to their soon to be ex-spouse. In an intereseting twist, Price is now claiming that she and Coleman were in a common law marital relationship, despite being previously officially divorced.

From an Orange County divorce attorney point of view, in California, common law marriages are not recognized. California is a community property State, which means all property acquired by couples during the marriage with community property funds should be subject to an equal division upon divorce.

According to Utah statutes, the law requires that couples “request to have a common-law marriage recognized” during the relationship or within one year after the end of the relationship. It is unclear if Price and Coleman had their purported common law marriage recognized.

In one of the stranger Hollywood divorce twists in recent memory, a number of recent media reports indicate actor Dennis Hopper has filed for California divorce from his wife Victoria even as he lies dying of prostate cancer. A persistent theme of the reporting is that money – specifically the disposition of the actor’s estate when he passes away – may lie at the heart of this unusual situation.

Hopper, 73, has a famously rocky personal life (one of his marriages lasted only eight days). Victoria is his fifth wife and by most accounts their 14-year marriage has brought the actor some personal stability. Media reports say a battle between Victoria and Hopper’s adult daughter (from an earlier marriage) Marin may be at the root of a dispute over money and custody of the couple’s six-year-old daughter.

It is difficult, of course, for outsiders to judge these things, but if the picture painted in the media is accurate the various members of the Hopper family seem destined to end up in court. This will be especially true if reports that the actor is heavily medicated most of the time – and, therefore, arguably not completely in control of his faculties – prove to be accurate.